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Country spotlight - Southeast Asia Capital Confidence Barometer: April 2012 - October 2012 - EY - Singapore

Southeast Asia Capital Confidence Barometer, April 2012 - October 2012

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Intra-Asia-Pacific cross border activity as well as inter Asia-Pacific cross border activity is increasingly perceived as a barometer for the global community’s economic health.

In the 6th global survey, we found economic outlook, optimism, business health and willingness to divest or engage in M&A activity varied by market cross Asia-Pacific.

Where are companies planning to invest over the next 12 months?

1. China 6. Canada
2. India 7. UK
3. United States 8. Germany
4. Brazil 9. Australia
5. Indonesia 10. Thailand





Six out of the top ten investment destinations preferred in Asia Pacific are from Southeast Asia with Indonesia emerging as one of the top five markets preferred globally.

Indonesia: among top 5 investment destinations across the world

Having reached investment grade, Indonesia has gained significant attention as an investment destination. Global respondents identified Indonesia among the top 5 investment destinations across the world.

Our Barometer reflects a number of important messages from the Indonesian respondents

  • 100% view their local economy to remain stable or improve, 78% is confident the economy will continue to grow
  • 61% expressed a positive outlook for corporate earnings, credit availability and employment growth, the highest among all Southeast Asian respondents
  • They were also the most positive among all Southeast Asian respondents, compared to six months ago, on the regulatory environment in their home market
  • 61% expressed growth is their highest priority with 83% committing excess cash to finance that growth
  • They also have a much higher credit appetite among all Southeast Asian respondents, with 59% carrying a higher than 25% debt to capital ratio and 61% expecting debt to be primary source of deal financing

Malaysia: among top 5 investment destinations with the Asia Pacific region

Malaysia continues to be recognized as one of the top 5 markets within the Asia Pacific region for investment.

Despite the positive inbound investor views, the Malaysian respondents have indicated challenging domestic sentiments in that market:

  • Only 38% believe the economic conditions are improving, a 12% drop compared to six months ago
  • 46% indicated they are focused on growth, the lowest among all Southeast Asian respondents
  • 62% indicated their businesses face significant revenue and margin pressures, the highest among all Southeast Asian respondents
  • 42% would use their excess cash to pay down debt, 32% higher than six months ago and the highest percentage across all Southeast Asian respondents

Singapore: most exposed to global volatilities

Singapore is Southeast Asia’s most liberal economy and is also most exposed to global volatilities. Views expressed by Singapore based respondents reflect the corporate mood locally:

  • 46% view the local economic conditions are improving, 9% higher than six months ago. However, those who view the economic conditions to be declining also increased from 39% to 30%
  • The percentage of cashed up corporates is the highest among Southeast Asian respondents with 56% carry less than 25% debt to capital ratio. Closed to two-third of them expect this trend to continue for the next 12 months
  • 58% expect to engage in M&A activities. 33% would spend their excess cash on inorganic growth with 62% view cash will be their primary source of deal financing



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